Analysis Research Report on Merging and Restructuring Decision-Making of China¨s Home Appliances Chain Industry

Abstract
•  Merging and Restructuring Motives of China 's Home Appliances Chain Industry

With entering into WTO, the world economy has more effect on China . Also the globalization is spreading faster in the world. In this new market environment, the home appliances industry has encountered much international competition, and has to be restructured. Eventually, some of them will be out of the market during competing, and only several large chain enterprises of home appliances can be left. Their resources can be optimized and leading advantage achieved during merging and restructuring to improve the market efficiency and energy, so that they compete with others who are in the same industry and overseas home appliances retailers.

According analysis, there are several reasons for frequent merging and restructuring activities in home appliances chain industry in China .

1, Problem of market share and market concentration. Currently in China , there are over 30,000 home appliances retailers, but the top 5 enterprises only occupied 20% of whole home appliances retailing market. In the countries like U.S and Japan , their top 5 enterprises occupy 90% of the whole home appliances retailing market. Owing to low market concentration, it is not strong enough in enterprise scale and core competitivity, when overseas home appliances retailing magnates, like American Bestbuy, and Japanese Xiaodao Electronics, etc, enter into China's market, the domestic enterprises will be possibly in the disadvantageous position because of the capital, techniques and management are not strong enough while competing with overseas magnates. This is a shock to our national industry. Also this is why domestic top home appliances retailers are trying to enlarge channel construction through merger and enterprises' scale to compete with other enterprises at home and abroad.

2, Low net profit. The expanding of chain enterprises of home appliances is resulted from profit driving. The home appliances retailing in China probably is making the lowest profit in all industries, only 4%-5% on average, no more than 10% at most. But in the U.S, Bestbuy can make 25%. Under this situation, opening more stores is the way to reach higher saleroom, get lower price from the manufacturers, or higher profit on return. Today, market is fully opened up, but the market resource is limited, so some strong chain enterprises of home appliances have to enlarge their selling channel by merging and restructuring to occupy the market when overseas enterprises enter into China 's market.

3, Selling share of home appliances market in China results into enterprises' merging and acquiring. According the analysis, there is 500billionRMB market share of home appliances, but the chain stores only occupy 20%, and this is the drive of chain enterprises magnate to enlarge their scale; brings integration to the whole home appliances retailing. And during the integration course, the small enterprises must be out of the market, or taken over by large ones with good management. Thus, the chain enterprises of home appliances shall transform their scale advantage into competition advantage, so that they can find a position in the market.

4, Fierce channel competition and fast expanding of chain enterprises result into conformation. The analysis shows that currently in China , we have no nationwide chain enterprises except Gome and Suning. Sanlian , Yongle and other large home appliances chain enterprises are still regional enterprises, they increasingly exploit the second and third-class markets after the first-class market is saturated. In the future years, the second and third-markets will be fiercer and merging and restructuring activities will be carried out more frequently than before for enterprises want to have better position in the market. Meanwhile, home appliances magnate TCL has established their own selling system in 2005. Owing to their good channel base in the second and third markets, and they have held the opportunity, so they will have threat on the future of traditional enterprises. Under this situation, many enterprises have chosen cooperation and conformation; the original competition relation has changed into the competition and cooperation relation, so that the both enterprises can fill each other's weak point, make their spreading faster, and save their time and cost.

Partial merged and restructured cases list in home appliances chain industry

Case

Time

Analysis

Gome purchased Yongle

2006

After purchase, the whole saleroom has broken through 70billionRMB; plus Yongle purchased Dazhong, the total stores are over 600, saleroom over 80billionRMB, which formed No .1 in China 's home appliances chain industry. However, whether resource integration lowered cost and played more important role in scale benefit are waiting to prove.

Yongle purchased Chankun

2005

July 1 st 2005, Yongle purchased Chankun. The latter comes from Taiwan, is a small home appliances enterprise which established its factory in Fujian long time ago and is started from producing electric iron, and later it became the largest 3C chain enterprise in China Taiwan.

Gome purchase Jiangshu Jin Taiyang

2006

Jin Taiyang was famous home appliances chain enterprises in jiangshu, it owned 8 stores in Changzhou; occupied 50,000 m2 ; and total saleroom was over 1billionRMB which occupied 50% market share in Changzhou market.

Bestbuy purchased Five-Star

2006

Bestbuy purchased Five-Star, the latter was the fourth after Gome, Suning and Yongle; and the former is the largest in America , who owns over 940 stores.

3 Analysis on Merging and Restructuring Trend of Home Appliances Chain Industry in China

Though the home appliances industry in China keeps high development in recent years, the percentage of chain scale in home appliances industry is increasingly higher than before, the concentration is very low. this is because the entrance threshold into the home appliances industry is low, so that result into many medium and small-size enterprises opened a great number of stores which distributed the industry's scale, weaken enterprises' competitivity. As fierce competition as today with chain industry at home and broad, the domestic enterprises has to reform and seek approaches for the future. According the analysis, under this situation, enterprises have to enlarge the market scale and occupancy on one hand; and enhance the management of stores and core competition on the other hand, So that the domestic enterprises can compete with overseas magnates (such as Bestbuy from America and Xiaodao from Japan) in home appliances chain industry. To improve the market occupancy, domestic enterprises have to exploit selling channels in the second and third-class markets, and enlarge stores coverage to enhance the competitivity. Every region has its regional chain industry of home appliances, so the most direct way for the top enterprises like Gome, Suning, Yongle, and Sanlian, etc, is conformation, which means to integrate local marketing channels. Meanwhile, broadened channels also can enhance pricing ability and profitability of enterprises.

By this situation, in the future, Gome, Suning and other magnates in home appliances industry shall make further effort to enlarge the market occupancy, and the only way the reach this goal is through merger, and to exploit the second and third-class market positively is keystone in recent years in the market of home appliances retailing. Also the merging and conforming activities can improve the market concentration and the competition with overseas enterprises. There are about 30,000 home appliances enterprises, the share of the top five totally is less than 20%; but in America, there are only 1,000, the share of Bestbuy, Home Appliances Market and other larger chain enterprises in home appliances industry is 60% of the whold American market. When foreign capital enters, domestic enterprises have not enough capital and capacity to compete. Therefore, domestic home appliances enterprises shall continue to improve the market concentration through merger.

In recent years, the global corporations and local enterprises, all of them encounter the challenge of low consumers' trustfulness and selling performance of individual store which push the chain stores into the corner. Thus, in the home appliances industry today, with continuously foreign capital flowing into China, domestic chain enterprises shall improve their competitivity with other chain enterprises at home and abroad by exploiting the second and third-class market through merging and restructuring, which also is the theme in the future years.

Catalogue
Analysis Report on Merging and Restructuring Trend of China¨s Home Appliances Chain Industry
Chapter One Research summary 
One Background
Two Content
Three	Methods
Four	Team
Chapter Two Current Development of Global Home    Appliances Chain Industry
Five	 Development features of global home appliances chain industry 
Six	 Structure of supply and demand of global home appliances chain industry
1	Analysis on industrial structure 
2	Analysis on market scale development 
3	Analysis on market demand trend 
Seven	Analysis on competition structure of global home appliances manufacturing 
1	Analysis on concentration of market competition 
2	Analysis on regional competition structure 
3	Analysis on scale competition structure 
Chapter Three	  Analysis on Actualities and Development Trend of China¨s Home Appliances 
Chain Industry 
Eight	Current features of China¨s home appliances chain industry 
Nine	Analysis on current investment of China¨s home appliances chain industry
Ten Analysis on supply and demand relationship of China¨s home appliances chain industry
1、Overall supply 
1.1Industrial investment and output scale of China¨s home appliances chain industry
1.2Analysis on production concentration of China¨s home appliances chain industry
2、Overall demand 
2.1Analysis on market scale and demand features of China¨s home appliances chain industry
2.2Analysis on demand trend of China¨s home appliances chain industry
Eleven	  alysis on Home Appliances Chain Industry with Foreign Capital in China 
1、Features and regional distribution of foreign capital entering into China¨s 
home appliances chain industry
2、Analysis on main modes of foreign capital entering into China¨s home
 appliances chain industry
3、Analysis on development strategy of foreign capital entering into China¨s home 
appliances chain industry
Chapter Four	 Analysis on Market Subdivision of China¨s Home Appliances Chain Industry 
Twelve	  rst-class market 
1、Analysis on general situation and features 
2、Analysis on market orientation and development strategy 
3、Analysis on supply and capital chains 
Thirteen	Second-class market 
1、Analysis on general situation and features 
2、Analysis on market orientation and development strategy 
Analysis on supply and capital chains
Fourteen	Third-class market 
1、Analysis on general situation and features 
2、Analysis on market orientation and development strategy 
Analysis on supply and capital chains
Chapter Five  Analysis on Environment of Investment Policy of China¨s Home Appliances
 Chain Industry
Fifteen	 Effect of macro-economic policies on home appliances chain industry 
Sixteen	 Effect of industrial policies on home appliances chain industry
Chapter Six  Analysis on Factors Affecting Development of Home Appliances Chain Industry
Seventeen	Analysis on entrance and secession barrier of China¨s home appliances c
hain industry
Eighteen	SWOT analysis on business development of China¨s home appliances chain industry
Nineteen	Problems of development of China¨s home appliances chain industry
Chapter Seven   Analysis on Current Merging and Restructuring of China¨s Home Appliances
 Chain Industry 
Twenty	 alysis on merging and restructuring background of China¨s home appliances c
hain industry
Twenty-one	 Alysis on merging and restructuring features of China¨s home appliances
 chain industry
Twenty-two	   alysis on merging and restructuring obstacles of China¨s home appliances
 chain industry
1、Policy 
2、Capital 
3、Technology 
Chapter Eight	 Analysis on merging and restructuring cases of Overseas Home Appliances 
Chain Industry 
Twenty-three	Best Buy held Five Star Home Appliances 
1、Analysis on background and motive of merging and restructuring 
2、Analysis on process and scheme of merging and restructuring 
3、Analysis on scheme and succeed and failed experience 
4、Analysis on development strategy after integration
Twenty-four	   Best Buy purchased Canadian FutureShop
1、Analysis on background and motive of merging and restructruring 
2、Analysis on process and scheme of merging and restructuring 
3、Analysis on scheme and succeed and failed experience 
4、Analysis on development strategy after integration
Chapter Nine	   Analysis on Merging and Restructuring Trend of Overseas Home
 Appliances Chain in China 
Twenty-five	Analysis on development of overseas home appliances chain industry in China 
1、Investment trend 
2、Investment regions 
3、Investment features 
4、Structure of investment products 
5、Market performance
Twenty-six	   Analysis on investment and merging and restructuring of Japanese 
Xiaodao Appliances in China 
1、Analysis on current investment of Xiaodao in China 	
2、Analysis on core competitivity of Xiaodao 
3、Analysis on merging and restructuring and feasibility of Xiaodao 
Twenty-seven	   Analysis on investment and merging and restructuring of Best Buy in China
1、Analysis on current investment of Best Buy in China 	
2、Analysis on core competitivity of Best Buy
3、Analysis on merging and restructuring and feasibility of Best Buy 
Twenty-eight	American War Mart Chain Corporation
1、The Investment, Merging and Restructuring Analysis of War Mart in China
2、The Investment Situation of War Mart in China
3、The Core Competition Analysis of War Mart in China
4、The Merging and Restructuring Trend Analysis of War Mart in China
Twenty-nine	French Carrefour
1、The Investment, Merging and Restructuring Analysis of Carrefour in China
2、The Investment Situation of Carrefour in China
3、The Core Competition Analysis of Carrefour in China
4、The Merging and Restructuring Trend Analysis of Carrefour in China
Thirty	 Japanese Dianqiao Electronics
1、The Investment, Merging and Restructuring Analysis of Japanese Dianxiao Electronics 
in China
2、The Investment Situation of Japanese Dianqiao Electronics in China
3、The Core Competition Analysis of Japanese Dianqiao Electronics in China
4、The Merging and Restructuring Trend Analysis of Japanese Dianqiao Electronics in China
Thirty-one	   German Press Market 
1、The Investment, Merging and Restructuring Analysis of German Press Market in China
2、The Investment Situation of German Press Market in China
3、The Core Competition Analysis of German Press Market in China
4、The Merging and Restructuring Trend Analysis of German Press Market in China
Chapter Ten	   Analysis on Merging and Restructuring Cases of Domestic Home 
Appliances Chain Industry 
Thirty-two	  ome Purchased Wuhan Zhongshang 
1、Analysis on background and motive of merging and restructruring 
2、Analysis on process and scheme of merging and restructuring 
3、Analysis on scheme and succeed and failed experience 
4、Analysis on development strategy after integration
Thirty-three	Gome Purchased Harbin Hei Tian¨e 
1、Analysis on background and motive of merging and restructruring 
2、Analysis on process and scheme of merging and restructuring 
3、Analysis on scheme and succeed and failed experience 
4、Analysis on development strategy after integration
Thirty-four	Gome Merged Jiangshu Jin Taiyang
1、Analysis on background and motive of merging and restructruring 
2、Analysis on process and scheme of merging and restructuring 
3、Analysis on scheme and succeed and failed experience 
4、Analysis on development strategy after integration
Thirty-five	Gome Purchased Shenzhen Yi Haojia 
1、Analysis on background and motive of merging and restructruring 
2、Analysis on process and scheme of merging and restructuring 
3、Analysis on scheme and succeed and failed experience 
4、Analysis on development strategy after integration
Thirty-six	   Yongle Purchased Chankun 
1、Analysis on background and motive of merging and restructuring 
2、Analysis on process and scheme of merging and restructuring 
3、Analysis on scheme and succeed and failed experience 
4、Analysis on development strategy after integration
Thirty-seven	Dazhong Purchased Yongle Cooperation 
1、Analysis on background and motive of merging and restructuring 
2、Analysis on process and scheme of merging and restructuring 
3、on scheme and succeed and failed experience 
4、Analysis on development strategy after integration
Thirty-eight	Yongle Purchased Xiamen Siwen Appliances 
1、Analysis on background and motive of merging and restructuring 
2、Analysis on process and scheme of merging and restructuring 
3、Analysis on scheme and succeed and failed experience 
4、Analysis on development strategy after integration
Thirty-nine	Yongle Purchased Nanjing Shangyuan
1、Analysis on background and motive of merging and restructruring 
2、Analysis on process and scheme of merging and restructuring 
3、Analysis on scheme and succeed and failed experience 
4、Analysis on development strategy after integration
Forty	Yongle Purchased Tongli 
1、Analysis on background and motive of merging and restructuring 
2、Analysis on process and scheme of merging and restructuring 
3、Analysis on scheme and succeed and failed experience 
4、Analysis on development strategy after integration
Forty-one	Five-Star Purchased Qingdao Yatai 
1、Analysis on background and motive of merging and restructuring 
2、Analysis on process and scheme of merging and restructuring 
3、Analysis on scheme and succeed and failed experience 
4、Analysis on development strategy after integration
Forty-two	Dongguan Shishang Appliances Purchased Xinghua¨s Eight Stores 
1、Analysis on background and motive of merging and restructuring 
2、Analysis on process and scheme of merging and restructuring 
3、Analysis on scheme and succeed and failed experience 
4、Analysis on development strategy after integration
Chapter Eleven	 nalysis on Main Competitivities of Merging and Restructuring
 of China¨s Home Appliances Chain Industry 
Forty-three	Gome
1、Analysis on Gome¨s Products Structure  
2、Company¨s Capital Operation 
3、Analysis on IT Competitivity 
4、Analysis on Marketing Network 
5、Analysis on Main Suppliers 
6、Analysis on Development Strategy 
7、Analysis on Merging and Restructuring Trend and Feasibility 
Forty-four	  Suning Home Appliances 
1、Analysis on Gome¨s Products Structure  
2、Company¨s Capital Operation 
3、Analysis on IT Competitivity 
4、Analysis on Marketing Network 
5、Analysis on Main Suppliers 
6、Analysis on Development Strategy 
7、Analysis on Merging and Restructuring Trend and Feasibility
Forty-five	  Dazhong Home Appliances 
1、Analysis on Gome¨s Products Structure  
2、Company¨s Capital Operation 
3、nalysis on IT Competitivity 
4、Analysis on Marketing Network 
5、Analysis on Main Suppliers 
6、Analysis on Development Strategy 
7、Analysis on Merging and Restructuring Trend and Feasibility
Forty-six	   Jiangshu Five-Star 
1、Analysis on Gome¨s Products Structure  
2、Company¨s Capital Operation 
3、Analysis on IT Competitivity 
4、Analysis on Marketing Network 
5、Analysis on Main Suppliers 
6、Analysis on Development Strategy 
7、Analysis on Merging and Restructuring Trend and Feasibility
Forty-seven	Sanlian Home Appliances 
1、Analysis on Gome¨s Products Structure  
2、Company¨s Capital Operation 
3、Analysis on IT Competitivity 
4、Analysis on Marketing Network 
5、Analysis on Main Suppliers 
6、Analysis on Development Strategy 
7、Analysis on Merging and Restructuring Trend and Feasibility
Forty-eight	Zhengzhou Bafeng Home Appliances 
1、Analysis on Gome¨s Products Structure  
2、Company¨s Capital Operation 
3、Analysis on IT Competitivity 
4、Analysis on Marketing Network 
5、Analysis on Main Suppliers 
6、Analysis on Development Strategy 
7、Analysis on Merging and Restructuring Trend and Feasibility
Forty-nine	  Guiyang Honghua Home Appliances 
1、Analysis on Gome¨s Products Structure  
2、Company¨s Capital Operation 
3、Analysis on IT Competitivity 
4、Analysis on Marketing Network 
5、Analysis on Main Suppliers 
6、Analysis on Development Strategy 
7、Analysis on Merging and Restructuring Trend and Feasibility
Chapter Twelve	   alysis on Regional Merging and Restructuring Opportunities 
of China¨s Home Appliances Chain Industry 
Fifty	Bohai Economic Zone 
1、Analysis on Development Features and Competitivities of Regional Home Appliances Industry 
2、Analysis on Merging and Restructuring Trend and Feasibility of Regional Home
 Appliances Industry
Fifty-one	Changjiang Delta Economic Zone 
1、Analysis on Development Features and Competitivities of Regional Home Appliances Industry 
2、Analysis on Merging and Restructuring Trend and Feasibility of Regional Home
 Appliances Industry
Fifty-two	Zhujiang Delta Economic Zone 
1、Analysis on Development Features and Competitivities of Regional Home Appliances Industry 
2、Analysis on Merging and Restructuring Trend and Feasibility of Regional Home
 Appliances Industry
Fifty-three	Northeast 
1、Analysis on Development Features and Competitivities of Regional Home Appliances Industry 
2、Analysis on Merging and Restructuring Trend and Feasibility of Regional Home
 Appliances Industry
Fifty-four	   Central Part 
1、Analysis on Development Features and Competitivities of Regional Home Appliances Industry 
2、Analysis on Merging and Restructuring Trend and Feasibility of Regional Home
 Appliances Industry
Fifty-five	   Southwest 
1、Analysis on Development Features and Competitivities of Regional Home Appliances Industry 
2、Analysis on Merging and Restructuring Trend and Feasibility of Regional Home
 Appliances Industry
Fifty-six	  Northwest 
1、Analysis on Development Features and Competitivities of Regional Home Appliances Industry 
2、Analysis on Merging and Restructuring Trend and Feasibility of Regional Home
 Appliances Industry
Chapter Thirteen	  Analysis on Merging and Restructuring Opportunities
 in Industrial Chain of China¨s Home Appliances Chain Industry 
Fifty-seven	Analysis on Industrial Chain of Home Appliances Chain Industry 
Fifty-eight	Analysis on Merging and Restructuring Opportunitie
s in Upriver Enterprises of Home Appliances Chain Industry
Fifty-nine	   Analysis on Merging and Restructuring Opportunities with Ot
her Industries of Home Appliances Chain Industry
Chapter Fourteen	   Analysis on Merging and Restructuring Opportunitie
s in Scale of China¨s Home Appliances Chain Industry
Sixty	Analysis on Merging and Restructuring Opportunities of Large-Scale
 Home Appliances Chain Industry 
Sixty-one	Analysis on Merging and Restructuring Opportunities of Medium-Siz
e Home Appliances Chain Industry
1、Nong Gongshang 
1.1Selling 
1.2Products Structure 
1.3Market Channel 
1.4Core Competitivity 
1.5Development Strategy 
1.6Analysis on Merging and Restructuring Feasibility 
1.7Analysis on Value of Merging and Restructuring 
2、Jinan Sanlian 
2.1Selling 
2.2Products Structure 
2.3Market Channel 
2.4Core Competitivity 
2.5Development Strategy 
2.6Analysis on Merging and Restructuring Feasibility 
2.7Analysis on Value of Merging and Restructuring
3、Zhengzhou Bafang 
3.1 Selling 
3.2Products Structure 
3.3Market Channel 
3.4Core Competitivity 
3.5Development Strategy 
3.6Analysis on Merging and Restructuring Feasibility 
3.7Analysis on Value of Merging and Restructuring
4、Guizhou Honghua 
4.1Selling 
4.2Products Structure 
4.3Market Channel 
4.4Core Competitivity 
4.5Development Strategy 
4.6Analysis on Merging and Restructuring Feasibility 
4.7Analysis on Value of Merging and Restructuring
Sixty-two	Analysis on Merging and Restructuring Opportunities of Small-Size Home
 Appliances Chain Industry
1、Chongqing Shangshe 
1.1Selling 
1.2Products Structure 
1.3Market Channel 
1.4Core Competitivity 
1.5Development Strategy 
1.6Analysis on Merging and Restructuring Feasibility 
1.7Analysis on Value of Merging and Restructuring
2、Harbin Hei Tian¨e 
2.1Selling 
2.2Products Structure 
2.3Market Channel 
2.4Core Competitivity 
2.5Development Strategy 
2.6Analysis on Merging and Restructuring Feasibility 
2.7Analysis on Value of Merging and Restructuring
3、Hefei Baida
3.1Selling 
3.2Products Structure 
3.3Market Channel 
3.4Core Competitivity 
3.5Development Strategy 
3.6Analysis on Merging and Restructuring Feasibility 
3.7Analysis on Value of Merging and Restructuring
4、Tianjin Yishang 
4.1Selling 
4.2Products Structure 
4.3Market Channel 
4.4Core Competitivity 
4.5Development Strategy 
4.6Analysis on Merging and Restructuring Feasibility 
4.7Analysis on Value of Merging and Restructuring
5、Dongguan Shishang 
5.1Selling 
5.2Products Structure 
5.3Market Channel 
5.4Core Competitivity 
5.5Development Strategy 
5.6Analysis on Merging and Restructuring Feasibility 
5.7Analysis on Value of Merging and Restructuring
Chapter Fifteen Analysis Merging and Restructuring Risk of China¨s Home Appliances 
Chain Industry 
Chapter Sixteen Suggestion on Merging and Restructuring of China¨s Home Appliances
 Chain Industry

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